Drug Company Pays $26.7 Million to Settle Two Lawsuits

Novo Nordisk Inc. settled two lawsuits on Friday, agreeing to pay more than $25 million to settle lawsuits that accused the pharmaceutical manufacturer of illegally promoting a bleeding disorder medication and paying pharmacists kickbacks to endorse its diabetes drugs.

In a settlement with the Department of Justice, the Danish drug maker will pay $25 million to resolve allegations of improperly marketing its hemostasis management drug, NovoSeven, resulting in false Medicare and Medicaid claims. Novo Nordisk was accused of promoting NovoSeven for unapproved conditions, a practice known as "off label" uses.In a separate settlement with the Department of Justice, four states and the District of Columbia, the company will cough up an additional $1.725 million to resolve accusations its sales representatives paid off Rite Aid pharmacists to recommend its Novolin and Novolog diabetes products. The kickback scheme, the suit alleged, also resulted in fraudulent Medicaid claims.

Novo Nordisk denies any wrongdoing in either settlement.

NovoSeven is FDA-approved to treat certain bleeding disorders in hemophiliacs, but the off-label suit accused the drug company of encouraging health care professionals to prescribe NovoSeven for unapproved uses, including as a coagulatory agent for trauma patients, general surgery, cardiac surgery, liver surgery, liver transplants and intra-cerebral hemorrhage.

Novo's unlawful and "focused campaign" to sway doctors and hospitals, the suit said, resulted in false claims nationwide to Medicare and Medicaid for off-label prescriptions -- claims that weren't reimbursable. The federal share of the civil settlement amounts to approximately $21.4 million, while state Medicaid programs will share some $3.6 million.

"Federal law prohibits pharmaceutical manufacturers from marketing drugs for unapproved uses, and restricts them from creating a financial incentive for doctors that may conflict with the interests of their patients," U.S. Attorney for the District of Maryland Rod J. Rosenstein said in a statement. "Drugs should be marketed only for purposes for which they have been deemed safe and effective and prescribed only because they are expected to benefit the patient."

Under the settlement, Novo Nordisk has also agreed to an " expansive corporate integrity" agreement with the Office of Inspector General of the Department of Health and Human Services, which requires the company to implement procedures to avoid and detect any future off-label drug promotion.

The pharmacists, together with Novo reps, targeted patients they deemed suitable candidates for Novolin or Novolog and contacted physicians, patients and other pharmacists to encourage them to use or recommend these drugs.

As part of the scheme, pharmacists accessed -- or allowed Novo Nordisk reps to access -- confidential patient information, which was used for marketing events designed to convince patients to substitute competing diabetes drugs with Novolin or Novolog.

The settlement also requires Novo to sign a Corporate Integrity Agreement with the Department of Health and Human Services, Office of Inspector General.

"When pharmaceutical companies pay kickbacks -- as Novo Nordisk is alleged to have done -- it is especially insidious because patients may not be receiving untainted medical advice," Tom O'Donnell, special agent-in-charge of New York's Office of the Inspector General for the Department of Health and Human Services, said in a statement.

"The allegations in this case were particularly egregious because they involved the disclosure of confidential patient information," Loretta E. Lynch, U.S. Attorney for the Eastern District of New York, said in a statement.

Novo Nordisk denied the allegations in a press release, which claimed the company is "committed to running our business according to high legal and ethical standards," Jim Shehan, corporate vice president and U.S. general counsel for Novo Nordisk Inc., said in a statement.

"With this settlement, we avoid the distraction and costs of a lengthy legal battle, which would not have been in the best interest of the company or its stakeholders," Shehan added.